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10-Q





☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 June 30, 2023





☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from _______________ to ______________


1-3863


L3HARRIS TECHNOLOGIES, INC.





Delaware34-0276860(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)


1025 West NASA BoulevardMelbourne,Florida32919(Address of principal executive offices)(Zip Code)


321 727-9100


Securities registered pursuant to Section 12(b) of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock, par value $1.00 per shareLHXNew York Stock Exchange


Yes


Yes





Large accelerated filerþAccelerated filer☐Non-accelerated filer ̈Smaller reporting company☐Emerging growth company☐








þ


189,132,693







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Page No.Part I. Financial Information:ITEM 1.     Financial Statements (Unaudited):Condensed Consolidated Statement of Operationsfor the Quarter and Two Quarters Ended June 30, 2023 and July 1, 20222Condensed Consolidated Statement of Comprehensive Income for the Quarter and Two Quarters Ended June 30, 2023 and July 1, 20223Condensed Consolidated Balance Sheet at June 30, 2023 and December 30, 20224Condensed Consolidated Statement of Cash Flowsfor the Two Quarters Ended June 30, 2023 and July 1, 20225Condensed Consolidated Statement of Equityfor the Quarter and Two Quarters Ended June 30, 2023 and July 1, 20226Notes toCondensed Consolidated Financial Statements8Report of Independent Registered Public Accounting Firm (PCAOB ID:42)22ITEM 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations23ITEM 3.     Quantitative and Qualitative Disclosures About Market Risk36ITEM 4.     Controls and Procedures37Part II. Other Information:ITEM 1.      Legal Proceedings38ITEM 1A.   Risk Factors38ITEM 2.      Unregistered Sales of Equity Securities and Use of Proceeds38ITEM 3.      Defaults Upon Senior Securities39ITEM 4.      Mine Safety Disclosures39ITEM 5.      Other Information39ITEM 6.      Exhibits39Signatures41








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ITEM 1.FINANCIAL STATEMENTS.













Quarter EndedTwo Quarters Ended(In millions, except per share amounts)June 30, 2023July 1, 2022June 30, 2023July 1, 2022Revenue from product sales and services$4,693$4,135$9,164$8,238Cost of product sales and services(3,476)(2,907)(6,763)(5,767)Engineering, selling and administrative expenses(783)(744)(1,556)(1,489)Business divestiture-related gains, net26—26—Impairment of other assets(60)—(78)—Non-operating income, net83108165214Interest expense, net(111)(67)(213)(135)Income before income taxes3725257451,061Income taxes(21)(55)(55)(116)Net income351470690945Noncontrolling interests, net of income taxes(2)1(4)1Net income attributable to L3Harris Technologies, Inc.$349$471$686$946Net income per common share attributable to L3Harris Technologies, Inc. common shareholdersBasic$1.84$2.45$3.61$4.91Diluted$1.83$2.42$3.60$4.86Basic weighted-average common shares outstanding189.2192.1189.7192.6Diluted weighted-average common shares outstanding190.1194.0190.7194.5










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Quarter EndedTwo Quarters Ended(In millions)June 30, 2023July 1, 2022June 30, 2023July 1, 2022Net income$351$470$690$945Other comprehensive income (loss):Foreign currency translation income (loss), net of income taxes28(73)35(76)Net unrealized income (loss) on hedging derivatives, net of income taxes4(7)9(2)Other comprehensive income (loss), recognized during the period32(80)44(78)Reclassification adjustments for gains included in net income(7)(2)(19)(8)Other comprehensive income (loss), net of income taxes25(82)25(86)Total comprehensive income376388715859Comprehensive (income) loss attributable to noncontrolling interest(2)1(4)1Total comprehensive income attributable to L3Harris Technologies, Inc.$374$389$711$860










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(In millions, except shares)June 30, 2023December 30, 2022AssetsCurrent AssetsCash and cash equivalents$366$880Receivables, net of allowances for collection losses of $35 and $40, respectively1,3831,251Contract assets3,1642,987Inventories1,5551,291Income taxes receivable4840Other current assets334258Assets of business held for sale—47Total current assets6,8506,754Non-current AssetsProperty, plant and equipment, net2,1862,104Operating lease right-of-use assets725756Goodwill18,41717,283Other intangible assets, net6,4016,001Deferred income taxes8473Other non-current assets699553Total assets$35,362$33,524Liabilities and EquityCurrent LiabilitiesShort-term debt$582$2Accounts payable2,0291,945Contract liabilities1,6481,400Compensation and benefits389398Other accrued items935818Income taxes payable365376Current portion of long-term debt, net361818Liabilities of business held for sale—19Total current liabilities6,3095,776Non-current LiabilitiesDefined benefit plans184262Operating lease liabilities714741Long-term debt, net7,8676,225Deferred income taxes452719Other long-term liabilities1,3051,177Total liabilities16,83114,900EquityShareholders’ Equity:Preferred stock, without par value; 1,000,000 shares authorized; none issued——Common stock, $1.00 par value; 500,000,000 shares authorized; issued and outstanding 189,085,602 and 190,611,458 shares at June 30, 2023 and December 30, 2022, respectively189191Other capital15,39115,677Retained earnings3,1112,943Accumulated other comprehensive loss(263)(288)Total shareholders’ equity18,42818,523Noncontrolling interests103101Total equity18,53118,624Total liabilities and equity$35,362$33,524










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Two Quarters Ended(In millions)June 30, 2023July 1, 2022Operating ActivitiesNet income$690$945Adjustments to reconcile net income to net cash provided by operating activities:Amortization of acquisition-related intangibles338303Depreciation and other amortization168162Share-based compensation4569Share-based matching contributions under defined contribution plans121113Pension and other postretirement benefit plan income(141)(198)Impairment of other assets78—Business divestiture-related gain, net(26)—Gain on sale of asset group—(8)Deferred income taxes(243)(326)(Increase) decrease in:Receivables, net(105)(146)Contract assets(159)(25)Inventories(99)(259)Other current assets(67)31Increase (decrease) in:Accounts payable23(44)Contract liabilities220(21)Compensation and benefits(10)(63)Other accrued items(3)(103)Income taxes10376Other operating activities(76)(18)Net cash provided by operating activities764788Investing ActivitiesNet cash paid for acquired business(1,973)—Additions to property, plant and equipment(164)(117)Proceeds from sale of property, plant and equipment, net—4Proceeds from sales of businesses, net712Proceeds from sale of asset group, net—18Cash used for equity investments(9)(30)Other investing activities12Net cash used in investing activities(2,074)(121)Financing ActivitiesProceeds from borrowings, net of issuance cost2,2497Repayments of borrowings(1,060)(10)Change in commercial paper, net579—Proceeds from exercises of employee stock options1334Repurchases of common stock(518)(729)Cash dividends(436)(435)Tax withholding payments associated with vested share-based awards(28)(38)Other financing activities(5)(3)Net cash provided by (used in) financing activities794(1,174)Effect of exchange rate changes on cash and cash equivalents2(14)Net decrease in cash and cash equivalents(514)(521)Cash and cash equivalents, beginning of period880941Cash and cash equivalents, end of period$366$420










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(In millions, except per share amounts)Common StockOther CapitalRetained EarningsAccumulated Other Comprehensive LossNon-controlling InterestsTotal EquityBalance at March 31, 2023$189$15,407$2,998$(288)$102$18,408Net income——349—2351Other comprehensive income, net of income taxes———25—25Shares issued under stock incentive plans—2———2Shares issued under defined contribution plans163———64Share-based compensation expense—22———22Tax withholding payments on share-based awards—(2)———(2)Repurchases and retirement of common stock(1)(101)(20)——(122)Cash dividends ($1.14 per share)——(216)——(216)Other————(1)(1)Balance at June 30, 2023$189$15,391$3,111$(263)$103$18,531Balance as of April 1, 2022$193$16,089$3,128$(150)$106$19,366Net income (loss)——471—(1)470Other comprehensive loss, net of income taxes———(82)—(82)Shares issued under stock incentive plans—4———4Shares issued under defined contribution plans157———58Share-based compensation expense—41———41Tax withholding payments on share-based awards—(26)———(26)Repurchases and retirement of common stock(2)(351)(68)——(421)Cash dividends ($1.12 per share)——(217)——(217)Other——(2)—(1)(3)Balance as of July 1, 2022$192$15,814$3,312$(232)$104$19,190








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(In millions, except per share amounts)Common StockOther CapitalRetained EarningsAccumulated Other Comprehensive LossNon-controlling InterestsTotal EquityBalance at December 30, 2022$191$15,677$2,943$(288)$101$18,624Net income——686—4690Other comprehensive income, net of income taxes———25—25Shares issued under stock incentive plans—13———13Shares issued under defined contribution plans1120———121Share-based compensation expense—45———45Tax withholding payments on share-based awards—(28)———(28)Repurchases and retirement of common stock(3)(433)(82)——(518)Cash dividends ($2.28 per share)——(436)——(436)Other—(3)——(2)(5)Balance at June 30, 2023$189$15,391$3,111$(263)$103$18,531Balance as of December 31, 2021$194$16,248$2,917$(146)$106$19,319Net income (loss)——946—(1)945Other comprehensive loss, net of income taxes———(86)—(86)Shares issued under stock incentive plans—34———34Shares issued under defined contribution plans1112———113Share-based compensation expense—69———69Tax withholding payments on share-based awards—(38)———(38)Repurchases and retirement of common stock(3)(611)(115)——(729)Cash dividends ($2.24 per share)——(435)——(435)Other——(1)—(1)(2)Balance as of July 1, 2022$192$15,814$3,312$(232)$104$19,190










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In the opinion of management, such interim financial statements reflect all adjustments (including normal recurring adjustments) considered necessary for a fair presentation of our financial condition, results of operations, cash flows and equity for the periods presented therein. The balance sheet at December 30, 2022 has been derived from our audited financial statements, but does not include all of the information and footnotes required by GAAP for annual financial statements.


Effective for fiscal 2023, which began December 31, 2022, we adjusted our reporting to better align our businesses and transferred our Agile Development Group (“ADG”) business from our Integrated Mission Systems ("IMS") segment to our Space & Airborne Systems (“SAS”) segment.


The historical results, discussion and presentation of our business segments as set forth in the accompanying Condensed Consolidated Financial Statements and these Notes reflect the impact of these changes for all periods presented in order to present segment information on a comparable basis. There is no impact on our previously reported consolidated statements of operations, balance sheets, statements of cash flows or statements of equity resulting from these changes.








The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the amounts reported in the accompanying Condensed Consolidated Financial Statements and these Notes and related disclosures. These estimates and assumptions are based on experience and other information available prior to issuance of the accompanying Condensed Consolidated Financial Statements and these Notes. Materially different results can occur as circumstances change and additional information becomes known.











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In October 2021, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2021-08, Business Combinations (Topic 805):Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Accounting Standards Codification ("ASC") 2014-09,Revenue from Contracts with Customers (Topic 606) . The update will generally result in an entity recognizing contract assets and contract liabilities at amounts consistent with those recorded by the acquiree immediately before the acquisition date rather than at fair value. The new standard is effective on a prospective basis for fiscal years beginning after December 15, 2022, with early adoption permitted. We adopted the new standard effective December 31, 2022. On January 3, 2023, we completed the acquisition of Viasat, Inc.’s (“Viasat”) Tactical Data Links product line (“TDL”) and applied the provisions of ASU 2021-08 in our purchase accounting for TDL. The adoption of the new standard did not have a material impact on our operating results, financial position, or cash flows.










1.958


2.25 three-year








As of the acquisition date, the fair value of consideration transferred consisted of the following:


(In millions)January 3, 2023Purchase price$1,958Estimated net working capital and other adjustments15Cash consideration paid1,973Settlement of preexisting relationship(1)1Fair value of consideration transferred$1,974





1








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January 3, 2023(In millions)PreliminaryMeasurement Period Adjustments, Net1PreliminaryAdjustedReceivables$28$—$28Contract assets18—18Inventories1641165Other current assets9—9Property, plant and equipment50—50Operating lease right-of-use assets12—12Goodwill1,0141031,117Other intangible assets850(98)752Deferred income taxes33235Other non-current assets6(1)5Total assets acquired$2,184$7$2,191Accounts payable$20$—$20Contract liabilities28—28Compensation and benefits2—2Other accrued items1191120Operating lease liabilities10—10Other long-term liabilities31637Total liabilities assumed$210$7$217Net assets acquired$1,974$—$1,974











The preliminary fair value of identifiable intangible assets acquired as of the acquisition date is as follows:


TotalUseful Lives(In millions)(In Years)Developed technology$34617Customer relationships:(1)Backlog832Government programs32316Total customer relationships406Total identifiable intangible assets acquired$752











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86
  6 14


61 33 28 6 15 18 21


1.117


83 164 90 185


22 48 20 25


23 54





4.7





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70 26 71








20 8













22 45 41 69





Two Quarters Ended June 30, 2023Two Quarters Ended July 1, 2022(In millions, except per share amounts)SharesWeighted-Average Grant-Date Fair ValuePer ShareSharesWeighted-Average Grant-Date Fair ValuePer ShareStock options granted(1)0.4$210.370.4$231.71Restricted stock and restricted stock units granted(2)0.2$209.130.2$223.35Performance share units grants(3)0.2$223.090.2$258.83





three-year


three-year


three-year





0.1 0.4 0.2 0.6










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(In millions)Foreign currency translationNet unrealized losses on hedging derivativesUnrecognized postretirement obligationsTotal AOCIBalance at December 30, 2022$(237)$(79)$28$(288)Other comprehensive income, before reclassifications to earnings and income taxes3512—47Income taxes—(3)—(3)Other comprehensive income before reclassifications to earnings, net of income taxes359—44Losses (gains) reclassified to earnings, before income taxes—2(27)(25)Income taxes—(1)76Losses (gains) reclassified to earnings, net of income taxes(1)—1(20)(19)Other comprehensive income (loss), net of income taxes3510(20)25Balance at June 30, 2023$(202)$(69)$8$(263)Balance at December 31, 2021$(118)$(89)$61$(146)Other comprehensive loss, before reclassifications to earnings and income taxes(76)(3)—(79)Income taxes—1—1Other comprehensive loss before reclassifications to earnings, net of income taxes(76)(2)—(78)Losses (gains) reclassified to earnings, before income taxes—3(12)(9)Income taxes—(1)21Losses (gains) reclassified to earnings, net of income taxes(1)—2(10)(8)Other comprehensive loss, net of income taxes(76)—(10)(86)Balance at July 1, 2022$(194)$(89)$51$(232)



















(In millions)June 30, 2023December 30, 2022Contract assets$3,164$2,987Contract liabilities, current(1,648)(1,400)Contract liabilities, non-current(1)(111)(117)Net contract assets$1,405$1,470











(In millions)June 30, 2023December 30, 2022Unbilled contract receivables, gross$5,034$4,629Unliquidated progress payments and advances(1,870)(1,642)Contract assets$3,164$2,987


295 898 254 771










(In millions)June 30, 2023December 30, 2022Finished products(1)$285$181Work in process486396Materials and supplies784714Inventories(1)$1,555$1,291





104 68













(In millions)IMSSASCSTotalBalance at December 30, 2022$7,709$5,778$3,796$17,283Reallocation of goodwill in business realignment(327)327——Goodwill from TDL acquisition——1,1171,117Goodwill decrease from divestitures(1)—(9)—(9)Currency translation adjustments1411126Balance at June 30, 2023$7,396$6,107$4,914$18,417





9 39





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nine eight 327


1.117








June 30, 2023December 30, 2022(In millions)Gross Carrying AmountAccumulated AmortizationNet Carrying AmountGross Carrying AmountAccumulated AmortizationNet Carrying Amount(1)Customer relationships(2)$6,539$2,480$4,059$6,124$2,189$3,935Developed technologies(3)914413501566366200Contract backlog22—11—Trade names — divisions955738955342Other22—22—Total finite-lived identifiable intangible assets7,5522,9544,5986,7882,6114,177In-process research and development———21—21Trade names — corporate1,803—1,8031,803—1,803Total identifiable intangible assets, net$9,355$2,954$6,401$8,612$2,611$6,001





10


406 31


346 10





173 338 151 303





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(In millions)Year 1$662Year 2598Year 3529Year 4467Year 5437Thereafter1,905Total$4,598


In-process R&D Impairment. During the quarter ended June 30, 2023, we closed a facility which resulted in a triggering event to evaluate the in-process research and development (“R&D”) related to the operations of the closed facility. As a result we recorded a $21 million non-cash charge for the impairment of in-process R&D intangible assets which is included in the “Impairment of other assets” line item in our Condensed Consolidated Statement of Operations.













(In millions)June 30, 2023December 30, 2022Variable-rate debt:Floating rate notes, due March 10, 2023 (“Floating 2023 Notes”)$—$250Term loan, due November 21, 2025 (“Term Loan 2025”)2,250—Fixed-rate debt:3.85% notes, due June 15, 2023 (“3.85% 2023 Notes”)—8003.95% notes, due May 28, 20243503503.832% notes, due April 27, 20256006007.00% debentures, due January 15, 20261001003.85% notes, due December 15, 20265505506.35% debentures, due February 1, 202826264.40% notes, due June 15, 20281,8501,8502.90% notes, due December 15, 20294004001.80% notes, due January 15, 20316506504.854% notes, due April 27, 20354004006.15% notes, due December 15, 20403003005.054% notes, due April 27, 2045500500Total variable and fixed-rate debt7,9766,776Financing lease obligations and other debt219222Total debt8,1956,998Plus: unamortized bond premium5870Less: unamortized discounts and issuance costs(25)(25)Total debt, net8,2287,043Less: current portion of long-term debt, net(361)(818)Total long-term debt, net$7,867$6,225





2.25 three-year





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2.0


250


2.25 no


0.10 1.125 1.875 6.5 6.1


no





250 250


800


no





2.4 364 364








364


no





2.0 five-year no








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1.0 3.4 3.9


397


At June 30, 2023, we had $579 million outstanding notes under our CP Program which primarily consists of amounts used for the June 15, 2023 repayment of the $800 million aggregate principal amount of our 3.85% 2023 Notes, which is included as a component of the “Short-term debt” line item in our Condensed Consolidated Balance Sheet. The outstanding notes have a weighted-average interest rate of 5.47% and mature at various dates, primarily in July 2023.










Quarter Ended June 30, 2023Two Quarters Ended June 30, 2023(In millions)PensionOther BenefitsPensionOther BenefitsNet periodic benefit incomeOperatingService cost$6$1$12$1Non-operatingInterest cost9121835Expected return on plan assets(152)(5)(305)(10)Amortization of net actuarial gain(3)(5)(5)(10)Amortization of prior service (credit) cost(6)1(13)1Non-service cost periodic benefit income(70)(7)(140)(14)Net periodic benefit income$(64)$(6)$(128)$(13)Quarter Ended July 1, 2022Two Quarters Ended July 1, 2022(In millions)PensionOther BenefitsPensionOther BenefitsNet periodic benefit incomeOperatingService cost$12$—$22$1Non-operatingInterest cost5521104Expected return on plan assets(156)(6)(312)(11)Amortization of net actuarial loss (gain)3(2)5(4)Amortization of prior service (credit) cost(8)1(14)1Non-service cost periodic benefit income(106)(5)(211)(10)Net periodic benefit income$(94)$(5)$(189)$(9)










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Net income per common share attributable to L3Harris common shareholders (“EPS”) is computed by dividing earnings to L3Harris common shareholders less earnings allocated to participating securities, if applicable, by the weighted-average number of common shares outstanding for the period. Net income per diluted common share attributable to L3Harris common shareholders ("diluted EPS") incorporates potential dilutive common shares, primarily consisting of employee stock options and restricted and performance share unit awards, into the weighted-average number of common shares outstanding.





Quarter EndedTwo Quarters Ended(In millions)June 30, 2023July 1, 2022June 30, 2023July 1, 2022Basic weighted-average common shares outstanding189.2192.1189.7192.6Impact of dilutive share-based awards0.91.91.01.9Diluted weighted-average common shares outstanding190.1194.0190.7194.5


0.8 2.0 0.4 0.3







5.6 10.5


7.4 10.9






















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In certain instances, fair value is estimated using quoted market prices obtained from external pricing services. In obtaining such data from the external pricing services, we have evaluated the methodologies used to develop the estimate of fair value in order to assess whether such valuations are representative of fair value, including net asset value (“NAV”). Additionally, in certain circumstances, the NAV reported by an asset manager may be adjusted when sufficient evidence indicates NAV is not representative of fair value.





June 30, 2023December 30, 2022(In millions)TotalLevel 1TotalLevel 1AssetsDeferred compensation plan assets:(1)Equity and fixed income securities$71$71$64$64Investments measured at NAV:Corporate-owned life insurance3533Total fair value of deferred compensation plan assets$106$97LiabilitiesDeferred compensation plan liabilities:(2)Equity securities and mutual funds$8$8$8$8Investments measured at NAV:Common/collective trusts and guaranteed investment contracts217192Total fair value of deferred compensation plan liabilities$225$200














June 30, 2023December 30, 2022(In millions)Carrying AmountFair ValueCarrying AmountFair ValueTerm Loan 2025(1)$2,250$2,250$—$—All other long-term debt, net (including current portion)(2)5,9785,5987,0436,569Total debt, net$8,228$7,848$7,043$6,569






















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Quarter EndedTwo Quarters Ended(In millions, except per share amounts)June 30, 2023July 1, 2022June 30, 2023July 1, 2022Net EAC adjustments, before income taxes(1)$(31)$12$(87)$58Net EAC adjustments, net of income taxes(23)9(65)44Net EAC adjustments, net of income taxes, per diluted share(0.12)0.05(0.34)0.23





30 48


Revenue recognized from performance obligations satisfied in prior periods was $33 million and $69 million for the quarter and two quarters ended June 30, 2023, respectively, and $32 million and $90 million for the quarter and two quarters ended July 1, 2022, respectively










At June 30, 2023, our ending backlog was $24.9 billion. We expect to recognize approximately 35% of the revenue associated with this backlog by the end of 2023 and approximately 70% by the end of 2024, with the remainder to be recognized thereafter. At December 30, 2022, our ending backlog was $22.3 billion







three























Quarter EndedTwo Quarters Ended(In millions)June 30, 2023July 1, 2022June 30, 2023July 1, 2022Revenue from Product Sales and ServicesIMS$1,735$1,608$3,435$3,267SAS1,7151,5723,3703,089CS1,2899932,4521,956Corporate eliminations(46)(38)(93)(74)Total revenue from product sales and services$4,693$4,1359,164$8,238Income before Income TaxesSegment operating income:IMS(1)$162$207$347$458SAS(1)168203355380CS325238591467Total segment operating income6556481,2931,305Unallocated Items:Unallocated corporate department (expense) income, net(2)(35)19(41)15Amortization of acquisition-related intangibles(3)(173)(151)(338)(303)Additional cost of sales related to the fair value step-up in inventory sold(15)—(30)—L3Harris merger-related integration expenses—(26)—(50)Acquisition-related transaction and integration expenses(36)—(76)—Pre-acquisition and other divestiture-related expenses(2)(35)(12)(36)Business divestiture-related gains, net26—26—Gain on sale of asset group—8—8Impairment of other assets(4)(21)—(39)—LHX NeXt(5)(22)—(35)—FAS/CAS operating adjustment(6)23214543Total unallocated items(255)(164)(500)(323)Non-operating income, net83108165214Interest expense, net(111)(67)(213)(135)Income before income taxes$372$525$745$1,061





12 27








21
  18

















Quarter EndedTwo Quarters Ended(In millions)June 30, 2023July 1, 2022June 30, 2023July 1, 2022FAS pension service cost$(7)$(12)$(13)$(23)Less: CAS pension cost(30)(33)(58)(66)FAS/CAS operating adjustment23214543Non-service FAS pension income77111154221FAS/CAS pension adjustment, net$100$132$199$264





three


Quarter EndedJune 30, 2023July 1, 2022(In millions)IMSSASCSIMSSASCSRevenue By Customer RelationshipPrime contractor$1,127$1,084$798$1,035$987$691Subcontractor584621479554574294Intersegment24101219118Total revenue$1,735$1,715$1,289$1,608$1,572$993Revenue By Contract TypeFixed-price(1)$1,317$1,099$1,102$1,209$918$834Cost-reimbursable394606175380643151Intersegment24101219118Total revenue$1,735$1,715$1,289$1,608$1,572$993Revenue By Geographical RegionUnited States$1,281$1,475$834$1,154$1,380$631International430230443435181354Intersegment24101219118Total revenue$1,735$1,715$1,289$1,608$1,572$993


Two Quarters EndedJune 30, 2023July 1, 2022(In millions)IMSSASCSIMSSASCSRevenue By Customer RelationshipPrime contractor$2,281$2,094$1,605$2,121$1,964$1,347Subcontractor1,1091,2538221,1111,104590Intersegment452325352119Total revenue$3,435$3,370$2,452$3,267$3,089$1,956Revenue By Contract TypeFixed-price(1)$2,603$2,121$2,080$2,470$1,798$1,631Cost-reimbursable7871,2263477621,270306Intersegment452325352119Total revenue$3,435$3,370$2,452$3,267$3,089$1,956Revenue By Geographical RegionUnited States$2,538$2,929$1,625$2,336$2,722$1,256International852418802896346681Intersegment452325352119Total revenue$3,435$3,370$2,452$3,267$3,089$1,956














(In millions)June 30, 2023December 30, 2022Total AssetsIMS$11,030$10,925SAS9,1818,838CS7,1295,800Corporate(1)8,0227,961Total Assets$35,362$33,524





6.4 6.0







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100 1.38 441















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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.





































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Quarter EndedTwo Quarters Ended(Dollars in millions, except per share amounts)June 30, 2023July 1, 2022% Inc/(Dec)June 30, 2023July 1, 2022% Inc/(Dec)Revenue from product sales and services:IMS$1,735$1,6088%$3,435$3,2675%SAS1,7151,5729%3,3703,0899%CS1,28999330%2,4521,95625%Corporate eliminations(46)(38)21%(93)(74)26%Revenue from product sales and services4,6934,13513%9,1648,23811%Cost of product sales and services(3,476)(2,907)20%(6,763)(5,767)17%% of total revenue74%70%74%70%Gross margin1,2171,228(1)%2,4012,471(3)%% of total revenue26%30%26%30%Engineering, selling and administrative expenses(783)(744)5%(1,556)(1,489)4%% of total revenue17%18%17%18%Business divestiture-related gains, net26—*26—*Impairment of other assets(60)—*(78)—*Non-operating income, net83108(23)%165214(23)%Interest expense, net(111)(67)66%(213)(135)58%Income before income taxes372525(29)%7451,061(30)%Income taxes(21)(55)(62)%(55)(116)(53)%Effective tax rate6%10%7%11%Net income351470(25)%690945(27)%Noncontrolling interests, net of income taxes(2)1*(4)1*Net income attributable to L3Harris Technologies, Inc.$349$471(26)%$686$946(27)%% of total revenue7%11%7%11%Diluted EPS$1.83$2.42(24)%$3.60$4.86(26)%























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Quarter EndedTwo Quarters Ended(In millions)June 30, 2023July 1, 2022June 30, 2023July 1, 2022Amortization of acquisition-related intangibles$(150)$(133)$(292)$(267)Company-sponsored R&D costs(117)(145)(231)(301)Acquisition-related transaction and integration expenses(36)—(76)—L3Harris merger-related integration expenses—(26)—(50)LHX NeXt(22)—(35)—Gain on sale of asset group—8—8Pre-acquisition and other divestiture-related expenses(2)(35)(12)(36)Other ESA expenses(456)(413)(910)(843)Total ESA expenses$(783)$(744)$(1,556)$(1,489)








Quarter EndedTwo Quarters Ended(In millions)June 30, 2023July 1, 2022June 30, 2023July 1, 2022Non-service FAS pension income(1)$77$111$154$221Other, net6(3)11(7)Non-operating income, net$83$108$165$214




















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Quarter EndedTwo Quarters Ended(In millions)June 30, 2023June 30, 2023Impairment of customer contracts:IMS$3$3SAS2727Unallocated corporate expense—183048Facility closures:IMS99Unallocated corporate expense2121Impairment of other assets$60$78

















































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Quarter EndedTwo Quarters Ended(Dollars in millions)June 30, 2023July 1, 2022% Inc/(Dec)June 30, 2023July 1, 2022% Inc/(Dec)Revenue$1,735$1,6088%$3,435$3,2675%Operating income162207(22)%347458(24)%Operating income as a percentage of revenue ("operating margin")9%13%10%14%

















Quarter EndedTwo Quarters Ended(Dollars in millions)June 30, 2023July 1, 2022% Inc/(Dec)June 30, 2023July 1, 2022% Inc/(Dec)Revenue$1,715$1,5729%$3,370$3,0899%Operating income168203(17)%355380(7)%Operating margin10%13%11%12%

















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Quarter EndedTwo Quarters Ended(Dollars in millions)June 30, 2023July 1, 2022% Inc/(Dec)June 30, 2023July 1, 2022% Inc/(Dec)Revenue$1,289$99330%$2,452$1,95625%Operating income32523837%59146727%Operating margin25%24%24%24%

















Quarter EndedTwo Quarters Ended(Dollars in millions)June 30, 2023July 1, 2022% Inc/(Dec)June 30, 2023July 1, 2022% Inc/(Dec)Unallocated corporate department (expense) income, net(1)$(35)$19*$(41)$15*Amortization of acquisition-related intangibles(2)(173)(151)15%(338)(303)12%Additional cost of sales related to the fair value step-up in inventory sold(15)—*(30)—*L3Harris merger-related integration expenses—(26)(100)%—(50)(100)%Acquisition-related transaction and integration expenses(36)—*(76)—*Pre-acquisition and other divestiture-related expenses(2)(35)(94)%(12)(36)(67)%Business divestiture-related gains, net26—*26—*Gain on sale of asset group—8(100)%—8(100)%Impairment of other assets(3)(21)—*(39)—*LHX NeXt(4)(22)—*(35)—*FAS/CAS operating adjustment(5)232110%45435%Total unallocated items$(255)$(164)$(500)$(323)








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Two Quarters Ended(In millions)June 30, 2023July 1, 2022Cash and cash equivalents, beginning of period$880$941Operating Activities:Net income690945Non-cash adjustments340111Changes in working capital(120)(495)Other, net(146)227Net cash provided by operating activities764788Net cash used in investing activities(2,074)(121)Net cash provided by (used in) financing activities794(1,174)Effect of exchange rate changes on cash and cash equivalents2(14)Net decrease in cash and cash equivalents(514)(521)Cash and cash equivalents, end of period$366$420
































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June 30, 2023(In millions, except weighted average yield)OutstandingDaily AverageCP Program$579$588Weighted Average Yield5.47%5.33%





























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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.










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ITEM 4.CONTROLS AND PROCEDURES.



















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ITEM 1.LEGAL PROCEEDINGS.







ITEM 1A.RISK FACTORS.







ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.








Period*Total number ofshares purchasedAverage pricepaid per shareTotal number ofshares purchasedas part of publiclyannounced plans or programs(1)Maximum approximate dollar value of shares that mayyet be purchased under the plans or programs(1)($ in millions)Month No. 1(April 1, 2023 - April 28, 2023)Repurchase program(1)—$——$4,056Employee transactions(2)17,169$199.22——Month No. 2(April 29, 2023 - May 26, 2023)Repurchase program(1)548,738$186.96548,738$3,953Employee transactions(2)13,944$185.97——Month No. 3(May 27, 2023 - June 30, 2023)Repurchase program(1)106,242$176.41106,242$3,935Employee transactions(2)43,315$185.30——Total729,408654,980$3,935

















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ITEM 3.DEFAULTS UPON SENIOR SECURITIES.







ITEM 4.MINE SAFETY DISCLOSURES.







ITEM 5.OTHER INFORMATION.


Trading Plans








Name and titleDate of adoption of 10b5-1 Plan(1)Date of termination of 10b5-1 PlanScheduled expiration date of 10b5-1 Plan(2)Aggregate number of shares of common stock to be purchased or sold(3)Christopher E. KubasikChair and CEOMay 8, 2023N/ADecember 11, 2023Up to 46,528 shares(3)underlying options expiring in 2025Edward J. ZoissPresident, SASFebruary 14, 2023June 1, 2023(no sales)N/AUp to 34,819 shares, including 17,800 and 12,277 shares underlying options expiring in 2026 and 2027, respectivelyJune 5, 2023N/ADecember 4, 2023Up to 34,819 shares, including 17,800 and 12,277 shares underlying options expiring in 2026 and 2027, respectively













ITEM 6.EXHIBITS.





(2)* Agreement and Plan of Merger, dated as of December 17, 2022, by and among L3Harris Technologies, Inc., Aquila Merger Sub Inc. and Aerojet Rocketdyne Holdings, Inc., incorporated herein by reference to exhibit 2.1 to L3Harris Technologies, Inc.’s Current Report on Form 8-K filed with the SEC on December 19, 2022. (Commission File Number 1-3863)


(15)           Letter Regarding Unaudited Interim Financial Information.


(31.1)       Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.


(31.2)       Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.


(32.1)       Section 1350 Certification of Chief Executive Officer.





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(32.2)       Section 1350 Certification of Chief Financial Officer.






















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L3HARRIS TECHNOLOGIES, INC.(Registrant)Date: July 26, 2023By:/s/    MICHELLE L. TURNERMichelle L. TurnerSenior Vice President and Chief Financial Officer(Principal Financial Officer and Duly Authorized Officer)